Tuesday, December 19, 2006

UFC: 2006 Review and 2007 Preview

Few entertainment companies of any kind had as successful a year as the Ultimate Fighting Championship. A company with great longstanding growth potential, UFC finally exploded in 2006. When all is said in done, it may have ended up breaking its all time buy rate record on five separate occasions in one year. UFC pay-per-views have become a box office bonanza, and UFC has cultivated a stable of box office draws. The question for a lot of people this year has been whether UFC is a fad, and whether UFC can sustain itself in 2007. I believe that not only can UFC sustain its 2006 success, but that with the right moves it can fact still grow significantly.

The first regular column I wrote for the Observer site ran almost exactly four years ago, and it was on the UFC. At the time UFC was coming off Tito Ortiz vs. Ken Shamrock I, and a lot of people were calling for UFC to utilize more pro wrestling marketing techniques to build its product. My argument was that there were things UFC could learn from pro wrestling, but also that UFC should be careful in doing so because MMA was the product with the greater business potential.
My underlying message then is my underlying message now. UFC needs to have ultimate confidence in itself, because there is no greater sport and UFC has the inside track on presenting it in North America. The challenge for Zuffa then was against using short term techniques that would undermine the sport’s long term credibility. The challenge for Zuffa now is trying to make too much money in the short term and undermining the sport’s long term future.

UFC has had a huge 2006 because its events felt like major spectacles with important matchups. With the same schedule in 2007, there is no reason to believe the promotion can’t do even bigger business. The buzz is building on the product, and as people tell other people the sport will continue to grow if the product is good. However, UFC isn’t running the same schedule. Rather, they are talking about running many more shows in 2007.

UFC’s greatest threat is thus one imposed by itself: oversaturation. The more shows they run, the less important individual shows will seem and the more likely fans will be to skip individual shows. If they have true confidence in their product over time, they will build slowly and let business growth come naturally. UFC cards will feel special and over time the shows will become even more must see. There is no need to rush out 25-35 shows to make every last dollar you can now. If UFC has a little more patience, they can continue to grow and make their spot in American sports permanent. Running too many shows will jeopardize that growth and risk making UFC a fad that it would not otherwise be.

There are already signs that too many shows are taking their toll. The season finale of the Ultimate Fighter drew only a 1.1, as compared to 1.9, 2.0 and 2.0 for the three previous season finales. Part of this was that the season didn’t click with viewers very well, but a larger part was simply a greater number of UFC shows that made an individual show seem unimportant if it didn’t have a marquee fight. I asked Dana White about this at the post-UFC 65 press conference, and he didn’t seem to take any lesson from the lower rating. That’s a bad sign, and UFC needs to have greater prudence to ensure consistent and sustainable growth. The most recent Ultimate Fight Night drew another underwhelming rating.

There are ways for the company to grow without risking a dilution of the core product. Expanding international business is something UFC is already moving towards, and there is a lot of money there. A next generation video game will be a huge cash cow. There is enormous merchandising potential, particularly in marketing individual fighters rather than just the brand UFC.

UFC can also benefit from the problems of its biggest worldwide competitor, Pride Fighting Championships. With Pride potentially in serious jeopardy, UFC can bring in top Pride superstars when their contracts are up and set up marketable and fresh matchups. Those matchups wouldn’t be perceived as dream matches by casual fans now, but UFC has proven in 2006 that it can turn formerly unmarketable fighters into box office gold through short but effective countdown specials. Matt Hughes drew Zuffa’s worst buy rates for main event matches against Frank Trigg and Sean Sherk prior to Spike TV. In 2006, Hughes was possibly Zuffa’s biggest draw. Mirko Cro Cop isn’t known to most American fans now, but he will be in a hurry with UFC fully behind him.

With all of these advantages, UFC is poised for even bigger things in 2007. The promotion isn’t going anywhere, and Ortiz-Liddell II is unlikely to be its high water mark. UFC will have a fantastic 2007 and beyond unless it imposes a self-inflicted wound by being in too much of a hurry.

Other notes for 2007:

-Quinton “Rampage” Jackson should be pushed as a superstar immediately. Jackson, acquired in the WFA purchase, has the charisma and ability to be the biggest marquee superstar in American MMA. Yet, at this point in time few know who he is. You never have a second chance to make a first impression, so UFC should present Jackson as a huge star from the beginning. One of the ways UFC has gotten big reactions to its 2006 shows live is by dimming the lights and playing cool live graphics for main event fighters. They should do that for the introduction of Jackson. The ideal scenario is to have him ready at Ortiz-Liddell. If, as expected, Liddell wins, the show should end with Liddell in the ring, the lights being turned out, and Jackson being introduced with an elaborate video package and ring entrance that hypes him as the only man with an unavenged victory over Liddell. He tells Chuck he is coming for the title, and Dana announces that fight will happen in 2007 to end the show. It’s obviously very theatrical, but it will leave UFC on a high note in 2006 and give fans something big to look forward to in 2007. Jackson and Liddell as coaches for a season of the Ultimate Fighter would without a doubt lead to big business.

-UFC has purchased WEC and there is talk of using WEC as a separate company. This would invariably end up as a minor league feeder system of sorts for UFC, because UFC can’t spare the main event talent to run a second major MMA company. Running WEC as a second MMA company is a bad idea. There is already an elaborate system of minor league MMA promotions in North America, and UFC can pick and choose from among the top fighters in these promotions. There is no need to waste UFC time and resources when the service will be provided to them either way. It isn’t like professional wrestling, where the independent scene has for the most part died out. UFC would like to keep its competitors from lining up television deals, but it can’t produce enough television for every station and is just going to have to learn to live with that possibility.

-As UFC expands into new markets, it is wise to link local fighters to the markets when possible to build bases in a variety of locales. This is probably the IFL’s best idea, and UFC can execute it better by focusing on individual superstars rather than “teams” with limited appeal. Tito Ortiz in Orange County, Georges St. Pierre in Montreal and Matt Hughes, Rich Franklin & Tim Sylvia in the Midwest are natural starts, and UFC should continue with this trend. It will increase the UFC’s visibility and make local fighters look like bigger national stars.

-UFC is winning the war for greater media coverage, and this will continue to be a story to monitor in 2007. Already major newspapers like the Washington Post and Los Angeles Times are giving regular coverage to UFC. That will likely influence smaller papers over time, and lead to larger awareness and acceptance of the sport. There really isn’t any justification for the dearth of MMA coverage, and 2007 ought to be the year that changes.

Tomorrow: Observer Awards Ballot

12 Comments:

Anonymous tyson said...

UFC is cool. But there isn't enough "sport" aspect to it really. Fighters careers are too short and its neaarly impossible to reign supreme over specific weight classes or divisions. The rules that vary from company to company is another absurdity that needs to be fixed. As far as the fighters/fights there's only so many out there and the sport is growing but the true talent will never ly within this country. Thus making it harder and harder to continuously sell these fights to people. The success of the Ultimate Fighter has alot more to do with the 'team' concept and aspect then I think a lot of people realize. In my honest opinion, the IFL has much stronger legs heading into 2007. I've only heard about IFL, never seen it, but I caught the commercial for the Fox Sports Net airing of the championship and you can see already that there is a more "sport" than "fight" feel to the product. The NFL survived and rules because it is about the teams, not the players. While I don't think you can sell that with fighting, the big money will always go to the PPV marquee fight, but the continued interest has to depend on something besides rematch after rematch. At least in my opinion.

11:58 PM  
Blogger Fish said...

I thought that UFC still had yet to pick up the contracts on Rampage Jackson & Matt Lindland? Is this confirmed now?

10:09 AM  
Blogger Dave Ling & Franchise said...

Tyson... I couldn't disagree with you more if I tried. And I'll run through it with you..

How is brutal MMA combat fighting not enough sport? physical (check), tactical (check), competitive (check)... I missing your point there brother?

The fact that it's nearly impossible to reign over a division is a good thing. Matt Hughes had a long title run and so did Rich Franklin. Liddell is in the middle of a lengthy title reign. A lot of the key fighters in UFC have decently long careers, comprable with other major sports, and it's not like the UFC is having problems marketing their stars so the fighters must have some brand power.

Rules are being standardized in North America through state sanctioning.

Who cares what country the talent is coming from as long as the fighter is marketable.. do you actually think GSP being Canadian hurts his marketability?

If you think IFL is on stronger legs then UFC, you couldn't be more wrong. UFC has way more cash and superior talent and better TV exposure.

NFL rules because of identity with teams? How do you account for the explosion in popularity of fantasy sports? Every week people are tuning in to see how their player is doing... People are identifying with the personalities of the NFL like TO, Romo, LT, LJ, etc, etc...

Dude, I just couldn't disagree with you any more but thanks for giving me something to argue with.

8:27 PM  
Anonymous tyson said...

I'm not even sure you can put brutal combat fighting and sport into the same sentence and be able to keep my attention. I see what you're saying though and I agree there are some elements to consider it sport, but its just not. It's a fight. I don't see how not being able to identify with who the champion is for long periods of time is a good thing. Yeh it creates competition, but if anyone can beat anyone, where's my reasoning to tune into a Ultimate Fight Night without one recognizeable name? I think the rating for the most recent kind of indicates that without dominant stars, the product suffers. Mixed Martial Arts will never be sanctioned in every state. But if a certain product allows things like Pride with the kicking on the ground, which is beyond ridiculous, and their fans are drawn to things of that nature. Their product suffers from running a show in a state where such acts aren't allowed. As far as the marketability, there's a reason hockey suffered from the influx of talent from overseas, and fans not being able to associate with the talent is part of it. I mean jersey sales of Danus Zubrus aren't exactly hot items. Is Arlovski even welcome at UFC events? UFC's popularity has skyrocketed with the TV exposure, as will the IFLs. But with the team aspect to it the IFL has a greater chance of surviving in this country than the UFC as they are going to eventually run into the same problems that pro boxing is experiencing now. And fantasy football has blown up yes, right along with the internet and the sports junkies. But there's alot more money in gambling on the NFL and most people laying their money on the line are betting more on the teams than on the actual players. Do eagles fans bet the Eagles because they have McNabb? No those same fans are still betting the Eagles when Tucan Garcia is under center. More people bet them when McNabb starts this I understand. My point is you have to have a core. And much of UFC's core audience who use to watch back in the day have seen the company as 'selling out' and see the old days as what UFC was really about (much like ECW actually). And if your core isn't there then you have fair weather fans popping your buys and ratings, and much like WWE, when those fair weather fans split, your company is left staggering along waiting for the next big boom.

Again, UFC is cool. But there's not enough sport aspect to it. It's alot closer to acts like pro wrestling then it is to major entities like NFL, NBA and MLB. That honor falls into the lap of the IFL. Because the stars are the coaches and the teams, not necessarily the fighters. With the IFL a fighter can always be replaced.

9:19 PM  
Blogger Dave Ling & Franchise said...

Tyson, I like it, respect but I stil disagree with you or at the least want to refine some of your points.

- if you've been watching UFC for awhile I don't see how you couldn't recognize or be familiar with any of the champs (perhaps hold Anderson Silva)

- you watch UFN because unless you've been living in a cave you know who Diego Sanchez and Joe Riggs are... they are the draw and then UFC gives you an undercard to introduce "new" guys.. remember it's free TV

- in terms of rules, when Pride runs in Japan yes there are some more violent rules but when they ran in Vegas they ran under Commision rules just like UFC

- Arlovski is allowed at UFC events but I don't know why he'd want to show his face after serving as Sylvia's bitch in '06

- sport vs. fight betting, hold the Superbowl I'm betting most Vegas records for betting have been a result of huge boxing bouts and not things like NBA, MLB or NHL

- if you can't follow who the champions are in UFC, given all UFC's TV and how familiar UFC has made their faces I don't know what to say (save Anderson Silva whose lack of english language skills hurts his marketability)... how long does someone need to be champion before you can identify with them? Versus the paradigm, how long can someone be champion before the division is stale?

10:16 AM  
Anonymous tyson said...

As far as the champions go, If you polled people off the street who watch or have seen UFC, I would almost gaurentee that at least 50% can not name 3 or more of the title holders. The same can be said for professional boxing (although there are alot more classes/titles). And with the betting arguement, I was going out of the box as you did with the fantasy football arguement. In that, there is a strong fan base for the Eagles but there is a larger more national fan base for the Eagles + Donovan McNabb as opposed to the Eagles + Garcia.

Those fans are what I like to call fair wheather fans because they are only jumping on the bandwagon. Much like alot of the newer UFC viewers who are popping PPV buyrates and TV ratings. Point being, the problem that arises when there are either fighters people cant identify with or the talent level weakens the product is left waiting for the so called "next big thing". Whereas something like the IFL will always have the same teams or same coaches making it easier for the fans to identify with.

Id say beating the top 3 contenders in your weight class is the best way to keep the champions visible. Much easier said then done of course. But let's be honest UFC's core fanbase is really the only people who know or care who the actual champions are.

They treated the last Ultimate Fight Night like free tv. I saw the lineup on WO and at first thought it was a PPV lineup. My initial reaction was won't draw shit. But then I saw that it was UFN, and my reaction changed to, this won't draw shit. Now, Almost 1.0 is not exactly feces it is not nearly close to what the other shows have drawn. To me it showed without a big UFC name (Sylvia, Liddell, Ortiz, Hughes, Gracie) the UFC audience is more than cut in half, and that is just not a good thing. Which is why I think the IFL with it's teams and league elements has the ability to be a longer, stronger standing promotion (like the NFL, NBA, NHL) as opposed to UFC which is alot closer to Boxing or Pro Wrestling.

11:12 AM  
Blogger Dave Ling & Franchise said...

Tyson, I like where you're coming from, when I get to my local bar to watch UFC 66 I'm going to ask a bunch of people to name all the UFC champions.

I'll post up the results of the poll here and on my own blog.

Maybe I have too much faith in the human condition to be able to name 3 of 5 champions.

I'll tell you what though, I can't name any of the IFL teams... the level of fights there is so low I might as well be watching hobo boxing on YouTube. I don't care how identifiable the teams become, unless they get some better fighters in their brand, there's no way I'm watching.

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